Why is a bond with a higher interest rate often considered a higher risk investment?
A. More secure bonds have higher interest rates.
B. A higher interest rate means a higher rate of return on the investment.
C. A higher interest rate would provide too much of a return on the investment.
D. Some companies promise higher interest rates in order to attract the attention of investors.

Bonds with higher interest rates are often associated with higher risk because they may indicate the borrower's financial instability. Companies often offer these rates to attract investors despite their potential financial difficulties. Consequently, higher returns reflect higher risks involved in the investment. ;

Answered by GinnyAnswer | 2025-07-03

Bonds with higher interest rates are often seen as higher risk due to the borrower's potential financial instability. Issuers may need to offer these rates to attract investors, indicating a greater chance of default. Thus, a higher interest rate reflects the higher risk associated with the investment.
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Answered by Anonymous | 2025-07-04